Pertamina and CPC Taiwan have signed a Head of Agreement (HOA) to further their collaboration in constructing a naphtha cracker plant, as part of the Balongan Petrochemical Complex in West Java, Indonesia. The naphtha cracker is expected to have an annual capacity of 1 million tons of ethylene.
Participating in the virtual signing last Friday were Pertamina President Director Nicke Widyawati and Ming-Huei Chen, vice president of CPC Corporation, in Jakarta and Taipei, respectively. Also witnessing the signing was the Head of BKPM Bahlil Lahadalia, Deputy Minister of BUMN I Budi Gunadi Sadikin and Commissioner of Pertamina Condro Kirono.
Following a move by CPC to close its fifth naphtha cracker in Kaohsiung, Taiwan, in 2015, the state-owned oil company decided to relocate its decommissioned plant in Indonesia. CPC and Pertamina held many talks but failed to make progress. In October 2018, the two companies signed a Framework Agreement for a joint petrochemical investment. Joint feasibility studies have been conducted since mid-2019.
Commenting on the agreement, CPC Vice President J.Z. Fang said the value of the joint investment will total TWD250 billion (USD8.42 billion) with CPC and Pertamina holding a 45% stake each. The remaining 10% will be reserved for potential participants.
Widyawati said that as a national oil and gas company, Pertamina is committed to creating a strong petrochemical industry in Indonesia so that it can meet the country’s domestic needs and help reduce Indonesia’s imports of petrochemical products.
“This project is an important milestone to strengthen the petrochemical business portfolio so that in the next 10 years Pertamina can become a major player in the petrochemical business in the Asia Pacific region,” said Widyawati.
Expressing her appreciation to CPC for the cooperation that has been established, Widyawati said she is optimistic that it will continue as a strategic partner in the joint venture development project at the Balongan Petrochemical Complex. Widyawati also expressed her gratitude to the Indonesian government for its support, including in providing investment incentives.
The joint investment in Balongan is one of the 245 national strategic projects under Indonesian President Joko Widodo’s government, including toll roads, railroads, airports, harbors, refineries, gas distribution and irrigation projects.
“Going forward, Pertamina, together with the government and Taiwan’s CPC, will continue to strengthen cooperation to complete projects targeted to operate in 2026,” Widyawati said.